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[untitled]

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00:30:00

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Channel 24 (225 MHz)

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mpeg2video

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ac3

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480

TOPIC FREQUENCY

Us 12, Marin 7, San Francisco 4, Ms. Hale 3, Torres 2, California 2, Barbara 1, Moran 1, Recs 1, Authority 1, The Entire City 1, Pg&e 1, Vietor 1, Et Cetera 1, Formas 1, The City 1, Lpi 1, Bakersfield 1, Or Park Merced 1, Entire City 1,
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  SFGTV2    [untitled]  

    February 12, 2013
    3:30 - 4:00pm PST  

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at was, you know, in these dry-er years, if we did have to purchase a mix, or non-hetchy, would that increase the cost if it were 100% renewable? >> [speaker not understood]. when it's a dry year for us in the hetchy system, it's typically a dry year for everyone, which means there's upward price pressure in the electric market. so, he yes, i would expect that prices would be higher. yes, we would have to purchase more. we would have to meet whatever our commitment was to our customers in terms of the level of renewables. 100% renewable, we'd need to meet 100% renewable in our purchase plan. we would need to meet the mix requirements as well for, you
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know, what renewable product consistent with state law. and, so, that would serve as the floor and you could exercise discretion beyond that as to what the mix would be. that would be how you could dial in the pricing that keep it affordable in a high wholesale price year. but it's all those moving parts that we need to be managing under a scenario where we don't have a committed price like the shell project, with the shell approach. >> um-hm. >> yes. >> if i could just go back to slide 5 just for a minute. >> sure. >> can you help me understand why we have a firm number in the first column in 2012 and then we're going to the range in 2013? >> ah, because what we're trying to do in the 2013 polled, commissioner, is testing one price point so we
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can develop a curve, if you will, of opt-out likelihood under likely prices. >> that's going to give us better data. >> it should gives us richer data. once we've told you what the maximum affordable is, come back to you with a resource mix and an understanding of what that price point associated with the resource mix will mean to us in terms of opt-out. >> okay, that's very good. thank you. >> good, thank you. >> reedstrom. >> welcome back. >> thank you very much. so, what we've done, then, to respond to some preliminary questions was to provide updates for power availability as ms. hale said on average. one out of nine years is dry. but if we turn the clock back to 1987 through the early '90s, five out of six years were dry. and, so, it's not really nice and predictable when we tend to
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have droughts in california or dry water years. same way in the 1970s, we had a couple years out of four that were dry. and, so, on average it's one out of 9, but it can be for extended period of time as we've seen more recently in the late '80s and early '90s. nevertheless, though, we look back at the hetchy portfolio, dusted off some numbers that we had been looking at, and updated those assumptions. we also then, because of that very much unpredictability of wet-dry years. we shaped and formed the savings. if you start with the generation component and once you have unpredictability of wet versus dry and firm it and shape it, you find rate certainty for the rate payers. there's no cost difference between what shell has given us for the no-power price and what we would be able to do with our own hetchy power during the january to june runoff, firmed
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up, plus the market power rates. and, so, that was one key finding. in addition to that -- >> sorry, i just want to understand that. there was no price difference? >> there was no -- there was no significant projected savings. and, in fact, it came out once we firmed it, the firming costs and the shaping costs was about a dollar -- about a penny-43. while we started out with hetchy power being affordable, by the time you formed and shaped it, it was very close to what shell was giving us as a market price for the no power or market power. >> so, why, why wouldn't we go this way? >> it's a policy choice. one of the policy choices would be if we choose to go this way, which is a right answer, it does, however, then tie up 30 megawatts that you average generation that you wouldn't be able to sell to hunters point shipyard phase 2, or park
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merced, or transbay tower, or some other higher revenue paying customer that actually throws off more money that you could use for a go solar sf or delay other rate increases for the general fund. but that really is the policy trade-off. the other scenarios that we ran with the mixes of renewable, and that is one of the key drivers because depending upon whether you choose a bucket 1, which is one type of a renewable portfolio or bucket 2 that's firmly shaped or a bucket 3 which is tradable recs or tradable renewable energy credits, the price of those is dramatically different depending upon which one you choose. and, so, just to give you a rate comparison, if you buy bundled recs, that actually ties the renewable energy to a physical place where we can point to that power plant, that solar panel, that wind farm. that has in the marketplace -- that costs about 5 cents a
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kilowatt hour. if we buy a tradable rec, we can typically get those for less than a quarter of a penny per kilowatt hour. so, depending upon which green attribute we want to green up our portfolio, be it a light green portfolio versus a dark green portfolio, or whatever shade of green in between, it's either very expensive or less expensive depending upon which ones we do. so, what we've done is we've dusted off the lighter shade of green and then also our premium green product and showed you the mix there. and the key financial considerations are that the renewable product mix is what drives the difference in premium. and our deep green product is about $10 more a month versus a lighter green product would be about $6 a month. that's what agm had gone through that range. the recovery period for how quickly we recover the start up
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reserves, that $13-1/2 million, that brings things about a penny. if not as big a driver as the rec. the other difference in economies of scale, we come and you've given us the go ahead for a 20 to 30 megawatt program. and by way of comparison, if you look at the entire city, the entire city uses just under a thousand megawatts. and about 150 of that is power that we feed to the municipal railway from hetchy and others. and the rest of it is really pg&e served. and, so, what we have before you is a very small scale 30 megawatt program and we were on the one hand trying to balance the risks of opt out with also the availability and certainty to be able to find demand for that 30 megawatts to test the water. so, that means, though, if you have a very small program, you're not able to spread out
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costs, other costs as widely. and then the other big policy decision which you pointed to, commissioner vietor, it's a possible right answer to use hetch hetchy, but then it will then commit what would be future use. so in the event we have a normal hydro year. so, to put a finer point on what this means per month for average rate payers is summarized on slide 9. and if i may just walking across the row that says tier 1 clean power sf premium dollars per month, going with the shell contract as you previously seen, that's about $10 more a month. and it looks to a firm then shaped 4-1/2 year contract that gives us 100% certainty of exactly what the rates are going to be over the next 4-1/2 years. if you instead take a look at hetchy and on average hetchy is available about half of the year, and then we have to buy from the market half of the year, that can get us to about the same point. and it doesn't provide net
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savings because we had to firm and shape it. and provide that rate certainty. * if you look at a renewable energy credit mix like was discussed by local power at a previous meeting, by changing the mix of recs, just that one line item, if you move to more tradable recs which are less than a quarter of a penny which is five pennies for a bundled rec, you can get that premium down significantly to about $6 a month. and then the last numbers that we run was to try to figure what the mix would have to be in order to make a pg&e-like program. and we've read in the newspapers as have you their program is on average expected to cost about $6 a month. what that would mean for a tier 1 customer, we think, is about $3.67. and, so, what ms. hale has
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spoken to you about is to get plenty of input from you as far as what the pricing range would be so we have 2 points to then interpolate what could be a potential opt-out between deep green premium product and then a lighter green that does a rec mix similar to what lpi had mentioned as a scenario. >> what would you do? [laughter] >> would you opt in or opt out? because i'm totally confused. >> there are five right answers. it depends if you with wanta light green or dark green product. both green are moving the dial. what we found from previous surveys is there wasn't a big difference between 40% renewable and 100% renewable. >> let me tell you where we're going to have the problems. in the cost of staff to explain this to rate payers who will be calling in confused. i know i'm doing that with my
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medicare program. i don't know what to do, opt in or opt out. with drug programs, et cetera, we're going to have the same problem here because it's a very difficult decision-making process. now, what's been -- marin is the only comparable program today, right? so, what did they decide to do? >> they chose a two-part approach. >> so, they chose a two-part approach that we're looking at today? >> a light green -- >> and a dark green. and, so, what was the majority of the customers there? what did they opt for? >> so, if i may, marin has both the light and dark green. >> right. >> all customers are opted into the light green and then customers can choose to take that extra step and be in the dark green program. >> you need a higher premium, higher rate? >> higher rate. because they have a renewable mix that is more on the rec side, more favors the renewable energy credits and less
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bundled, they do have less of an overall premium than what we've -- in the left-hand column of what we've presented to you today. * mohr >> right. in terms of their program, have they done surveys to he see how the marin-ites like the program or don't like the program? >> i don't know if they've conducted surveys. they have about a 20% opt-out rate. most customers enrolled in marina enrolled in the light green program, not the dark green program, although they do have some success with the dark green program. and now they're in their about 2-1/2 years into operations, they are constructing local generation. they have committed to large scale solar projects, not locally site-ed, but within california. they are achieving success on that aspect of the program. >> [speaker not understood]? >> they are getting solar from
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bakersfield. they are also getting solar from a solar shade over a parking lot in marin civic center area. so, they have both local generation coming from this program as well as remotely site-ed generation from this program. >> is that part of our -- >> long-term goal? * our goal in this program is to have the local build. we will have local build immediately through the go solar sf program. then the question becomes in the later phases, how do we integrate that local build in? >> so, how many people do we have to sign up to make the program not deficient in term of funding? >> 20 to 30 megawatts worth of customers is about 75,000 to 90,000 accounts here in san francisco, looking just at the residential sector. >> 75 to 90,000, that's a big spread there. >> well, 20 to 30 megawatts worth of customer base, yes. the commission gave us
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authority to do a 20 to 30 megawatt program but has not told us -- we haven't presented to you and asked you to decide between those two yet. >> right. as you can see, i think it would be best to [speaker not understood]. i don't know about you, but -- >> so, what we're really looking for today is guidance on -- and your comfort with using that range of premium, between 6 and $10 for purposes of the survey so that we can come back to you with that data line that tells us, you know, that's the opt out rate under those different pricing scenarios. and we can come back to you and say -- make a recommendation with that information about size of program, rates. so, we're really looking for that guidance today. not for you to decide what the mix should be or what the size of the program should be, but, you know, that that's the right approach for our surveys. >> [speaker not understood]. >> i have a couple comments.
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it is hugely complicated, but it gets ultimately quite simple, i think. and the numbers on page 9 i think is where you get that simplicity. that the program that's the dark green program is going to have a premium of about 10 bucks, all right, okay. our current estimate of lpi's proposal and i say that cautiously because there is some discussion a to whether we understand each other's numbers. but our estimate of their program comes out to the light green proposal of 6 bucks and 36 cents. the problem is that pg&e has announced a program that gives you the same thing or what they say is the same thing for $3.67.
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so, i think the [speaker not understood] that simple, the consumer is going to be looking at pg&e gives me a likely alternative. i can get more light green from the city or i can spend more still to get dark green. that's why i think in the past we've been pushed to the dark green because that's the only way we can really differentiate ourselves from pg&e. light green is a light green, we lose. light green is a dark green we make -- for people who want to spend the extra money to do -- to get a better product. >> [speaker not understood] penal knee will have to pay property taxes beyond [speaker not understood]. >> but i think the best way it gets simple. and that's where i think the survey needs to test how people think about basically those three choices. one of the things that is in process here and that this last
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chart reflects is that last time when local power talked to us, they said they would get the light green alternative down to parity with aloe nigh is do two thing. use hetch hetchy and hetchy use the cheaper recs. what staff has done is try to put the numbers behind that concept and that's where there is still discussion going on, because clearly the lpi people are not happy with that estimate. but what it says is that because we're providing excess energy and firming it, that becomes as expensive as pg&e. now, there is an option, it would be a policy option. you don't have to do the excess. you can go into the base. you can say we're going to provide less energy to city hall or folks like that. that's firmer power. it would be cheaper to firm up. that's not what local power has said they're suggesting and
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it's not something i think i would support. but because we're talking about the least reliable power that we have, the cost of firming it is higher than it might otherwise be. and i think that makes sense. that passes the whiff test and sharper pencils are going to continue to work on this. i think we've made some real progress on it. the most unfortunate part of it is i think there is at least with the current numbers we're looking at, there is no way you can get down to parity with pg&e for light green without making major concessions on our power revenues and our power sales. and that will be -- that's not the subject of today's meeting, but it's -- i think that's the frustration you'll see in some correspondence and elsewhere. >> all right. commissioner vice president courtney. >> thank you, president torres.
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i have two questions about [speaker not understood]. the first one is can we categorize a particular percentage as being a high, a high participation rate? and if so, can we begin to assign a number in our minds what that is? >> so, let me ask the question. so, for example, in -- what slide? slide number 5, for example. we have said tier 1, we're expected 46% of the people to stay in the program. and, so, i believe the question is what number will we have to
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have to feel comfortable to move forward. and do you have that number, barbara? >> i would just say at this point we have been -- we have received guidance from the commission in the past that if more than half of the potential customers are indicating that they'd stay with the program, the -- we thought we had a viable program. when -- more than 50%. if it goes below that, i think then we need to take the pencils out again and see, do we have enough volume of customers available to enroll in this program to support a 20 to 30 megawatt commitment of purchasing power because that's ultimately what it is. you want to have enough customers saying they think they'd stay with us to subscribe the full amount of power we'd be procuring.
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>> so, is 35% a high rate of participation? >> i think it's a high rate of participation, but the hesitancy you hear from me is different customers have different consumption. so, it's not as simple as saying if it's 20,000 accounts it works because some of those may have such small consumption, the math doesn't work to commit all 20 to 30 megawatts. >> mr. rice from omni of build out, that would assist facilitating our commitment to local renewables. is there any way to begin attempting to assign a value or cost of that build out? >> there is. in fact, we have looked back at every one of our local power generations. san francisco should be proud to be one of the largest local generation municipalities in
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the country because of the sunset solar, all the solar on our city facilities. and, so, we have 20 different facilities or power generations already under -- in use and generating now. so, we have that experience. and then we could advance upon that. if i may also comment on ms. hale's last point for your previous question, when we were running the various pro formas, we also were trying to mitigate risks. and when we came to you and we said, look at this 20 to 30 megawatt program, that already was a tiny sliver of the thousand megawatts of use in the city. so, a thousand megawatts is used, and we were only asking for a 20 to 30 megawatt type of phase 1. if you look at just the usage in residential usage, it's about 215 megawatts.
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and, so, us going out with a 30 megawatt initial phase compared to 250 megawatts of total residential usage, we thought that was a conservative assumption. but even with that, we in particular looked a lot at tier 1 and tier 2, the very small users who the monthly green premium, would be very small dollars. it would be the 6 to $10 a month, or the 13 to $20 a month because we thought that that's still within a very much affordable range. and, so, those were parts of the, parts of the steps we took to be careful. and, so, when you say what is the expected level of participation, i think that we've tried to be very cautious and say that we're not going to know for sure. but if we use a thousand in the city and we're starting out with a program that is 30, that if this handful of customers here isn't ready to sign up on day one, we can quickly go to
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other neighborses in other parts of the city just within the residential community, not even looking at businesses to make sure that we have enough demand for that 30 megawatt. * >> i don't think, i don't think it's any mystery to anyone that we would have more conversations about the jobs component. and i would just, for those of you who recall the presentation that we received from local power the other day, i focused some attention on the org chart. the org chart deals specifically with contractors, training components, obviously the local hiring, those sort of things. i don't know that it's something we're going to have a conversation about today, but i believe that it should be, it should be prioritized when we're discussing costs of building out and what the value is of those costs to the
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communities that we're servinging, somewhat along the lines i'm interested in seeing the map that you're referencing and the outreach component. * so, i don't know that it's part of our conversation today, but i'm hoping that we'll prioritize it if it comes up again. >> yeah, that's a good point of entry because i wanted to follow-up again on some of commissioner moran's comments. but in particular to this distinction between the light greens that pg&e and the city of san francisco may be offering, i think one of the angles and one of the pieces that i think would be very interesting to get some data via the poll on is this job's piece, the local build out piece, how interested people are in that added component of our light green that pg&e is not offering. and if there is a framing, if
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we do get some information on that and then we can frame the program as having this local build out component that has all this value add, i think that does indeed differentiate substantially the two programs and probably at least $3 a month worth. so, i think that that's just an interesting piece that we should keep in the mix as far as can we get polling data, can we then -- you know, when you come back before us, talk about the communications and marketing strategy and say that, you know, this program, is it the light green offering, whatever it is, also holds the promise, either option holds the promise of additional jobs of, you know, a more secure system of your own community install program, your barn raising, whatever the language is that is going to be appealing and get people to understand that this is really a community program that we're trying to support. i also just, i really want to
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thank the staff for coming before us with this because i find it very helpful to be able to look at this in a different kind of way. i asked a lot of questions, what about marin, same kinds of questions president torres was talking about around, you know, they have a light green/dark green option. there is a reason more people are involved in light. we have been coming up against this issue around rates. you know, local power has brought a big value, i think, by saying what about hetchy in the mix? let's look at that. and, what about this, why is the rate -- why is there such a differentiation between the high rates that are being proposed by the deep green option, whatever it is, and the pg&e or phase 1, phase 2 in any of that? and i think this sheds light on why that is and gives us a better understanding so that we can make a much more informed policy decision. and you know, i'm a purist. i would love to stick with the dark green 100% renewable, 100%
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pure rec option, but i also understand that we need to set this program up for success. and we need to really lay the groundwork, and we can talk about phasing. we can say once local buildup starts, let's do less rec and do more renewable, figure out the interconnection issues and all that. but i appreciate being able to have this in the mix of an option. >> so, i just wanted to, you know, point out that things are changed since we did the polling earlier. and, so, from a business perspective, if we're going to buy 30 megawatts or 20 megawatts from shell, i want to make sure we have enough customers to sell it to. and, so, that's why we need to do the polling to see what the price points are. the other thing that is recent is that pg&e is offering a light green and they're going to actively market in marin and
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san francisco to opt out and get into their program. and, so, i think it's wise for us to take that in consideration now because if we look at marin, they're not faced with that challenge that they're about to see if pg&e moves in the light green and set up a firewall where they have another entity that really will encourage people to get out in marin. so, i just -- i'm a business person and i want to make sure that we make wise business decisions. and, so, the other thing that i think anson mentioned is the renewable portion, we talked -- we're talking about that and decoupling the build out for now and really focus on the mix from lpi and also given the fact that our program, we do have [speaker not understood] and renewable portion. so, i think putting that into the survey,